The Spend-Up

THE BIGGEST SURPRISE about America's defense boom was how long it lasted. Between the end of the Second World War and the inauguration of Ronald Reagan, military spending had never gone up for more than three years in a row—despite the Korean War, despite Vietnam. But in the last two years of the Carter Administration and the first four years under Reagan, military spending rose by an average of eight percent a year, after allowing for inflation. In the late Carter years we were spending roughly $200 billion a year (in 1986 dollars) on the military; now we're spending almost $300 billion. (All dollar comparisons in this article are in constant dollars, to remove the effects of inflation.) By 1983 the annual defense budget had grown larger than it had been in 1968, the peak spending year for Vietnam. By last year it had passed the peak for the Korean War. From 1982 through 1985 the United States spent more money on the military than it had during any four years of the Vietnam or the Korean War. It even spent more to operate the forces, now much smaller, than it had from 1951 to 1954, or 1967 to 1970.

During those earlier periods, of course, the money was going into field hospitals, combat pay, jet fuel, R&R, bombs and bullets, convoys, translators, mortars, grenades, prostheses, induction centers, and all the other raw materials of war. During the past four years larger amounts of money have gone into ... what?

Few people contend that America's forces are, across the board, weaker or less ready than they were five years ago, when the Reagan Administration began its crash attempt to redress the "decade of neglect" in military spending. But after years of the largest military budgets in our peacetime history, it is hard to find an objective measure by which American forces have significantly improved. During a congressional hearing this spring one witness, a defense consultant named Pierre Sprey, refused to talk about the military "buildup." It should be called a "spendup," he said, because virtually no buildup had occurred. The gap between the spendup and a real buildup reflects the gamble on which modern military policy is based. Since the end of the Second World War the United States has moved steadily toward smaller, more expensive armed forces, based on morecomplex weapons that in principle can make up for numerical superiority on the other side. In the past five years that movement has become a stampede.

There is one significant exception to the rule that much has gone into the Pentagon but little has come out. By every standard the people who have joined the armed forces are more qualified and better motivated, and they are slightly more numerous, than recruits were only a few years ago. In 1980 barely half of the Army's recruits had finished high school, and half belonged to the lowest intelligence group, Category IV. But in the past few years the military has had more applicants than places, and it has been able to turn away nearly everyone who lacks a high school diploma. When I toured military bases in the late 1970s, officers would sigh and fret as they talked about the poorman's Army, made up of wellmeaning rejects, that they had been asked to lead. Now manpower is their greatest source of pride—although as the civilian economy has rebounded, the military has had trouble holding onto those in highskill specialties, notably pilots. Both the activeduty force and the reserves have grown slightly in the past five years (active duty from about two million to more than 2.1 million, reserves from about 800,000 to about one million). People can still argue about restoring the draft, but now the arguments are about principles: How should a democracy allot the burden of military service? Is it just and fair to leave the risk of dying to volunteers? The debates are no longer driven by concerns about the quality of the people who have volunteered.

But manpower, though historically the most important factor in military excellence, is not the only one—and certainly is not the principal force behind our increased spending. Pay has gone up (mostly through acrosstheboard raises, rather than bonuses to those with the scarcest skills) but not stupendously, and certainly not by as much as the quality of the force. From 1980 to 1985 personnel costs rose by less than 20 percent, and as a share of overall defense spending, pay and benefits fell. The improvement in the force, hard to quantify but more like 200 percent than 20, has been due partly to the severe recession of 1982, partly to a sense that the military is "decivilianizing" itself and restoring its standards and selfesteem, and partly to the general resurgence of nationalistic pride.

The big increases in military spending were for hardware, not people. The military's "investment" accounts—for developing new weapons and procuring those ready to be bought—rose by 96 percent between 1980 and 1985. So where is the new equipment?

SEVERAL OUTSIDE STUDIES, which started to appear last fall, have shown that while America's military arsenal has been getting more expensive, it has not been getting larger or, on average, newer. For example, last October, Rudolph Penner, the director of the Congressional Budget Office, testified to the House Armed Services Committee about the inputoutput gap. During the four years of the Reagan buildup, he said, the United States had spent 150 percent more for tanks and armored vehicles than it had under Jimmy Carter, but had increased its purchases of tanks by only 30 percent. He said, "The number of missiles purchased increased only six percent despite a real increase of ninety percent in budget authority for this category. Aircraft purchases went up less than nine percent versus seventy-five percent growth in aircraft appropriations. Indeed, purchases of fixedwing combat aircraft were lower [from 1982 through 1985] than they were [from] 1977 through 1980."

Another congressional study, released by Republican Senators Charles GrassIey and Nancy Kassebaum and Representatives Denny Smith and Tom Tauke, described a similar pattern. The Reagan Administration bought 23 percent more ships in its first four years than the Carter Administration did, but it spent 48 percent more to buy them. Under Reagan the Army has bought 40 percent more helicopters—but paid over 150 percent more for them. Spending for Air Force and Navy airplanes rose by 75 percent, but the number of planes purchased fell by 12 percent.

Meanwhile, according to John Collins, of the Congressional Research Service, the Soviet Union was building more of practically everything faster, despite our "buildup." The United States had 16 percent more helicopter gunships in 1983 than in 1980; the Soviet Union had 64 percent more. The size of our fleet of surface ships increased by one percent during that period; theirs by five percent. Their antisubmarine aircraft fleet increased by 14 percent; ours decreased by six percent. The only important exception was attack submarines: ours increased by 20 percent while theirs fell by one percent.

Obviously, such numerical comparisons have their limits. For one thing, it takes a long time to build a ship, or even an airplane, so the full benefit of the buildup might not be obvious until later—the "outyears," as defense planners like to say. But as it turns out, many components of the American force are shrinking now and will keep on shrinking and aging even when the equipment we have paid for goes into service. One measure of how much new equipment we are getting, and of approximately how usable the equipment may be, is the machinery's average age. If we were matching past purchases, adding new planes and ships at the rate the old ones were moving into mothballs, the average age would remain constant. After a big buildup it would presumably decline, because of all the fresh new equipment on hand. Yet the average American ship, plane, or tank was older in 1985 than it was in 1980, but not so old as it will be in 1990. And, although they are getting older, the forces are not projected to get any larger than they are today.

The one exception is the Navy. Its Secretary, John Lehman, has staked his reputation and considerable ambition on rebuilding a 600ship Navy, and, in fact, the fleet should reach that level by the end of the decade. However, making the fleet larger will require not just building new ships but holding onto old ones longer. The average age of nuclear-powered attack submarines was 11.1 years in 1980, 13.5 years in 1985. In 1990, if the rebuilding plan is carried out, it will be 15.7 years. The average frigate was 9.7 years old in 1980 and will be 15.1 years old in 1990. The average aircraft carrier will move from 19.7 years old to 25.2—and all this after a buildup that has disproportionately emphasized Navy construction. The same pattern holds for airplanes, helicopters, and tanks. In 1976 the average Air Force fighter or attack plane was about nine years old; in 1988 it will be about eleven years old. The average strategic plane was fifteen years old in 1976 and will be twentyfour in 1988, after the B1 joins the fleet. Today's equipment is often more durable than yesterday's, and may often be modified to serve well at an advanced age. (B52s may be flying fifty years after they were originally designed.) Still, an aging force is an odd legacy of six years of intense spending—particularly after all those picturesque, prospending speeches by Ronald Reagan and Caspar Weinberger, who complained bitterly that American troops had to rely on equipment (especially B52s) often older than the soldiers were.

One other indication of the gap between spendup and buildup may be found in readiness and sustainability indices. Five years ago, when you got tired of worrying about military manpower problems, you could worry about readiness. Spending had been squeezed during the Ford and early Carter Administrations; weapons procurement, with its longterm contracts, couldn't be pared back quickly, so operating funds took the brunt of the cuts.

To judge simply by budget totals, the spendup should long ago have solved the readiness problems. One major category of readiness funding rose by more than 80 percent from 1980 to 1984 (this is "centrally managed material readiness," including spare parts and maintenance in repair depots). Overall, funds for operations and maintenance rose by more than a third. Yet readiness rates have remained virtually flat.

In 1982 the Army averaged 161.7 training days per battalion per year. In 1984 it averaged 161.9. In 1980, after the "decade of neglect," the Marines averaged 24.2 flying hours per crew per month. In 1984 they averaged 23.7. (For Army flyers the average was 18.8 hours in 1980 and 16.4 in 1984.) Air Force pilots had increased their flying time to twenty hours a month by 1984, slightly under the target set by the Carter Administration. In other areas there were modest improvements: the Navy's steaming days per ship per quarter was 32.4 in 1980 and 34.9 in 1984. The average "mission capable" rate for Army, Air Force, and Marine equipment was 79 percent in 1980 and 81 percent in 1984. The "Crating"—a measure of units in the top two readiness categories—was 74 percent in 1980 and 75 percent in 1984. None of these figures is a perfect guide to true readiness. Still, the most the Pentagon can claim is that missioncapable rates are "steady or slightly increasing," after years of rearming America.

HOW COULD WE have put so much money into the Pentagon and achieved so few visible results? One partial explanation, which began to attract political attention early this year, is the "inflation dividend" the military has received since 1981.

Ever since Jimmy Carter began the defense spendup in earnest, the political arguments have all concerned how much to increase the budget—after allowing for inflation, of course. Until recently no one paid much attention to just how large the inflation allowance should be. But late last year evidence began to turn up indicating that inflation allowances had inadvertently added as much as $40 billion—after compensating for inflation—to the Pentagon's budget, for no return at all in weaponry or readiness.

For most types of government spending—Social Security payments, say—inflation adjustments are made after the fact. For the Pentagon, however, the inflation adjustments are prospective. First, the Administration decides how much real growth it would like to see in the next year's defense budget, compared with this year's budget. Next, it estimates the inflation rate for the coming year and increases the budget goal accordingly. The resulting "nominal budget growth," or combination of real growth and expected inflation, becomes the basis for the next year's budget request.

James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne.
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James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

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